From the Executive Summary of the FY15 - FY19 Long Range Financial Forecast
The purpose of a Long Range Forecast is to provide Administrators, Committees, Town Meeting, and Taxpayers with important data regarding the finances of the Town. This particular document concerns the General Fund only; there is an additional report that provides a five year forecast of the two enterprise funds ( Water and Sewer). This year the Long Range Forecast is significantly different than the past reports. Prior reports included estimated future revenue and expenditures based on one set of existing circumstances. This year several different scenarios are estimated and the overall effect on the bottom line is presented in a summary form with details attached as exhibits at the end.
Through out all scenarios presented in this report, the debt service on borrowing is kept within the 5% policy limit. This means that a significant amount of capital investment within the General Fund would not be authorized. This is beyond the usual level of deferral that is recommended and Town Meeting approves. The majority of road, storm water, technology and school repairs and equipment would be deferred and the Town would fall further behind in the required upkeep of Town assets. This is because two major school projects are planned for FYI ($ 48 million) and FYI ($ 20 million). Even with state funding for a portion of these projects, they are of such magnitude that they do not fit within the debt limit.
From page 3 of the 2014-2019 Capital Budget Recommendations
The Town policy on debt service as a percentage of the General Fund budget creates a cap of 5%. The Summary Debt Service chart at the beginning of the Debt Service section of this package clearly shows that we begin to exceed that ceiling in FY17 if we approve all the projects requested in FY15, FY16 and FY17. That pressure is a major factor in the decision to defer some of General Fund projects for FY14. However, over the next several years there are some very costly School building renovation projects that overwhelm the debt service policy capacity and outpace even the total cost of this annual capital budget.
Generally, the Framingham Schools are bumping up against 50 years of age and will require major renovations that will cost $20 million per building. In FY16, the Fuller/Farley complex renovation is estimated at $48 million alone. We need to start the conversation about authorizing the bonding of these projects outside the Town debt service policy limit and outside the tax levy limit; voting these school renovations as a debt exclusion. Otherwise these single school projects will eliminate the annual capacity to invest in any other Town asset. With 14 school buildings the cost will be at least $308 million, not including inflation or need to increase the size of any individual building. As these school projects add up the Town could hit its legal debt limit of 5% of the total value of the Town.
From page 103 of the Annual Town Meeting Financials, Motions, and Background Materials
The FY2016 Operating Budget continues the three- year plan developed at the beginning of FY2015. The goals continue to be to keep the levy at 1.25%, moderate tax bills, manage the tax burden at a 60/ 40% split between residential and commercial tax sectors, hit our most important spending priorities and to make the plan sustainable.
One of the end results of the three year plan is to create an environment for a town- wide vote for a debt exclusion ( a limit time period override) for a major school building project as early as FY2017. This plan assumes that the state's School Building Authority( MSBA) will provide 51% of the funding for that project. It is clear from the long term budget forecasts that there is not enough capacity within the tax levy to fund a large school project. Hence the short term plan to create immediate relief for taxpayers by not raising the tax levy to its maximum amount, using alternative revenue sources and limiting growth in expenditures.
From page 190, of the 2015 Annual Report, you will find....
As the second of a three-year budget plan, the FY16 budget allowed for continued strategic investments for both the town and the schools.
While the committee appreciates the outstanding progress achieved by the School Department in making FHS, a Level 1 school and moving two schools from Level 3 to Level 2, it must consider not only this year's fiscal position, but also the long-term financial issues facing the Town. For example, the Town has projected the cost of replacing or substantially renovating two schools at a cost of between fifty million ($50,000,000) and one hundred and fifty million ($150,000,000) dollars, depending on the construction cost inflation, the interest rates and the State grants. But, the bonding for this project alone would put a substantial burden on the taxpayers and could require override or debt exclusion.
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